Using a reverse mortgage to enhance your retirement will free you up to enjoy your post-working years more..
Whether it's brunch out on the town or playing an extra round or two of golf, not having to pay your mortgage payment can improve your quality of life!
Find out what options are available for you! Complete this short questionnaire and explore how you can enhance your retirement!
Reverse Mortgage Explained (Pros and Cons)
Pro: More options available. There are many ways you can utilize a reverse mortgage:
Pro: You can stay in your home. Reverse mortgages allow a retired homeowner, with a reduced income, to remain in their home more comfortably. Not being able to afford their existing home is a major concern with seniors. Having a reverse mortgage option is a retirement life save for many.
Pro: You can improve your quality of life. There's only so much ramen, hot dogs and powdered iced tea a senior on a fixed income can take! If you find your income at retirement just barely gets you by, imagine how much improved life can be with an extra monthly income or by getting rid of your house payment.
Pro: Even with a low fixed income, qualifying is within reach. Generally, you either have to have enough income to comfortably cover the taxes, insurance and HOA (if any) of your home. The qualifying standards are much more relaxed with a reverse mortgage than with a traditional loan.
Con: Upfront fees and interest add up over time. Over time the balance on your loan can grow substantially, although the value of your home will also. If your home is the largest investment you've made, allow the equity to help you during retirement. You've earned it.
Con: Moving can become more complicated. While a reverse mortgage requires that you occupy the home, it doesn't mean you can't change homes. Just understand that the reverse loan doesn't transfer, so you would need to pay off the existing loan then take out a new one. Depending on your equity position and your local housing market, it could be more difficult if you want to move.
Con: The home must be your residence. You cannot rent out a home with a reverse mortgage, and if you stop living there for 12 moths the loan becomes due (you have to pay it off). Generally, if you need to be transferred to an assisted living facility, then typically the home is sold and the reverse mortgage paid off. Heirs can also take over the home and refinance into a non-reverse loan. There are exception for spouses.
The Bottom Line...
Reverse mortgages can be hard to understand and with the initial fees and interest over time, they can consume a significant portion of the building equity. They have been used to trick seniors into poor home repair scams and risky investments.
When utilized wisely by homeowners who understand them, they become a valuable tool to enhance retirement.